Fitch Ratings has downgraded the bonds sold to help finance the Bloomington to Martinsville corridor of Interstate 69 for a fifth time. Things have gotten so bad, Fitch actually skipped the CCC rating, lowering the bonds directly to CC from B-.
"Our motivation for the two-notch downgrade reflects the limited available options to complete the project," said Stacey Mawson, director with Fitch's Global Infrastructure Group, on Friday.
Earlier this week, the Indiana Finance Authority announced plans to take over the Section 5 project from I-69 Development Partners, the private company it hired in 2014 to convert 21 miles of Ind. 37 from Bloomington to Martinsville into I-69. The move comes after ongoing financial issues and multiple delays on the completion schedule. Originally, I-69 Development Partners said it could finish the project by Oct. 31, 2016, at a cost of about $325 million. It is now behind schedule and over budget. Recent estimates put the total cost at nearly $497 million — a 52.6 percent increase – with a substantial completion date of Aug. 31, 2018.
At this point, construction is progressing in a timely manner and all subcontractors are being paid, Mawson said. But the $72 million available in remaining funds is expected to run out by the end of the month. That leaves a shortage of about $164.8 million.
It's not yet clear where that money will come from. Dan Huge, the Indiana Finance Authority's public finance director, said in an email earlier this week that a funding source would be determined at the end of negotiations between the state, I-69 Development Partners and bondholders.
So far, bondholders have rejected an initial buyout offer from the Indiana Finance Authority. It's not clear what that initial offer was.